When I was interviewing Sunil Bharti Mittal several years back, I asked him
how passionate he was about Airtel, and would he be open to sell the company if
he got a good offer? Mittal gave me a long one about his passion for Airtel, but
also admitted that he would not be closed to the sell-off idea if the offer was
good. Whatever he told me, obviously Mittal must have been damn sure that he was
on a road where he will not look back.
The news of the possible merger of Bharti, India's biggest mobile operator,
and MTN, South Africa's largest telecom player could be a moment of great pride
in the history of Indian telecom. But there are other, more significant reasons
to pray for the success of this move.
Success of the Bharti-MTN deal is important for Indian telecom, because it is
estimated that if the country has to achieve its teledensity target for the next
five years, it requires more than $70 bn investment. Just like steel and
automobile, this deal could catapult India in the global telecom domain too. The
Indian market, is adding 10-12 mn subscribers every month, and is expected to be
a 700 mn plus telecom nation in the next three years. Global operators who have
already arrived include NTT DoCoMo of Japan, Sistema of Russia, Telenor of
Norway, Etisalat of Dubai, and Bahrain Telecom. And those waiting and watching
include Kuwait-based Zain Group, Qatar Telecom, and Telecom Italia.
Nationalist emotions apart, this marriage has the potential to quickly turn
the consolidated entity into a front runner in the race to be the largest
operator in the world. Industry experts estimate the new player to be $60 bn in
market value, over $20 bn in revenue, and have 200 mn subscribers in its pocket.
It could be the world's fourth largest operator, with operations in more than 23
countries in Asia, Middle East and Africa.
Nobody knows if there is going to be a new name or brand for the combined
entity, but there are certain advantages which it will certainly enjoy in this
market. Negotiation power with suppliers and equipment vendors will go up;
shared infrastructure and resources will bring costs down; and ARPU could go up
because the addressable market for various services will be doubled, and
possibly new revenue streams could be worked out.
A deal of this size surely needs political blessings too. Bharti's sudden
interest in a deal which fell through only some months back, shows their
confidence on the new Government and its policy makers. For instance, there is
still the FIPB and RBI in the absence of a policy on share swapping. Surely,
Airtel also has the backing of banks because it will need about $3-5 bn cash.
The coming few weeks will possibly be the most challenging for Sunil Bharti
Mittal. And if the deal comes through, the process of consolidation and
integration of an Indian and an African operator will be worth watching. And
perhaps be another global role model.
Ibrahim Ahmad
ibrahima@cybermedia.co.in
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